Scrapdog
Well-known member
- Joined
- Jan 24, 2006
- Posts
- 1,127
HOUSTON, July 17, 2008 – Continental Airlines (NYSE: CAL) today reported a second quarter 2008 net loss of $3 million ($0.03 diluted loss per share). Excluding $22 million of previously announced net after tax special items, Continental recorded a net loss of $25 million ($0.25 diluted loss per share).
The combination of record high fuel prices, weakening economic conditions and a weak dollar has resulted in the worst financial environment for U.S. network carriers since the 9/11 terrorist attacks.
“My co-workers are doing a great job working through the significant challenges facing our industry,” said Larry Kellner, Continental’s chairman and chief executive officer. “We will continue to work together to react to the market and maintain our focus on providing quality service to customers.”
In response to these challenges, Continental implemented a number of initiatives in the second quarter of 2008 to maintain its competitive position in the industry and bolster its cash balance including:
· Announcing capacity reductions beginning in September 2008, which Continental expects will result in a 10-percent decline in domestic mainline capacity, a 15.4-percent decline in domestic mainline departures and a 6.7-percent decline in consolidated capacity in the fourth quarter 2008 compared to the same period 2007
· Accelerating the retirement of 67 Boeing 737-300 and 737-500 aircraft, removing a majority of the least fuel efficient aircraft from its mainline fleet by the end of 2009, driving the difficult decision to eliminate approximately 3,000 positions across all work groups
· Entering into a new seven-year capacity purchase agreement with ExpressJet Airlines, Inc. to provide regional jet service at lower rates, resulting in approximately $50 million of annual savings
· Raising approximately $900 million through a variety of initiatives including an amended credit card marketing agreement, issuance of common stock, sale of Continental’s remaining equity interest in Copa Holdings, S.A. (Copa) and several secured borrowings
· Entering into framework agreements for a planned transition to the Star Alliance, linking worldwide networks and services of alliance members including United, Lufthansa, Air Canada, Singapore, ANA and Air China, to benefit customers and create revenue opportunities, cost savings and other efficiencies
· Implementing a new checked bag policy charging non-Elite customers on certain economy-class tickets a $25 service fee for a second checked bag, and numerous fuel surcharge and fare increases
Total revenue for the quarter of $4.0 billion increased 9.0 percent ($334 million) over the same period in 2007, as a result of increased fuel surcharges on passenger tickets and on cargo, as well as international growth, increased fees and fare increases. Passenger revenue grew 7.5 percent ($254 million) compared to the second quarter of last year.
“Despite solid operational and financial performance, we were unable to generate enough revenue to keep pace with the stratospheric increase in fuel prices,” said Jeff Smisek, president. “We will continue to take actions to increase our revenue and decrease our costs, while preserving our culture and core product integrity.”
Consolidated revenue passenger miles (RPMs) for the quarter increased 0.5 percent
year-over-year on a capacity increase of 2.7 percent, resulting in a second quarter consolidated load factor of 81.4 percent, 1.8 points below the second quarter record set in 2007.
Consolidated yield for the quarter increased 7.0 percent year-over-year. Consolidated revenue per available seat mile (RASM) for the quarter increased 4.6 percent year-over-year due to increased yields.
Mainline RPMs in the second quarter of 2008 decreased 0.2 percent compared to the second quarter 2007, on a capacity increase of 2.0 percent. Mainline load factor was 81.7 percent, down 1.8 points year-over-year. Mainline yield increased 6.0 percent over the same period in 2007. As a result, second quarter 2008 mainline RASM was up 3.8 percent over the second quarter of 2007.
During the quarter, Continental recorded a U.S. Department of Transportation (DOT) on-time arrival rate of 73.1 percent and a systemwide mainline segment completion factor of 99.5 percent.
For the fifth straight year, Continental was named the “Best Airline in North America” at the 2008 OAG Airline of the Year Awards.
In conjunction with the Transportation Security Administration (TSA), Continental expanded its paperless boarding pass pilot program, already in place at its Houston hub, to include its New York hub at Newark Liberty International Airport as well as Washington National Airport and Boston’s Logan International Airport. The program allows customers to receive boarding passes electronically on their cell phones or PDAs, which are scanned by TSA security officers at the checkpoint and can be used to board Continental’s flights, eliminating the need for paper boarding passes.
During the quarter, Continental launched the first-ever nonstop seasonal service between its hub at Cleveland Hopkins International Airport and Charles de Gaulle Airport in Paris, France.
The company’s average price per mainline gallon of fuel, including fuel taxes, increased 66.2 percent year-over-year.
The combination of record high fuel prices, weakening economic conditions and a weak dollar has resulted in the worst financial environment for U.S. network carriers since the 9/11 terrorist attacks.
“My co-workers are doing a great job working through the significant challenges facing our industry,” said Larry Kellner, Continental’s chairman and chief executive officer. “We will continue to work together to react to the market and maintain our focus on providing quality service to customers.”
In response to these challenges, Continental implemented a number of initiatives in the second quarter of 2008 to maintain its competitive position in the industry and bolster its cash balance including:
· Announcing capacity reductions beginning in September 2008, which Continental expects will result in a 10-percent decline in domestic mainline capacity, a 15.4-percent decline in domestic mainline departures and a 6.7-percent decline in consolidated capacity in the fourth quarter 2008 compared to the same period 2007
· Accelerating the retirement of 67 Boeing 737-300 and 737-500 aircraft, removing a majority of the least fuel efficient aircraft from its mainline fleet by the end of 2009, driving the difficult decision to eliminate approximately 3,000 positions across all work groups
· Entering into a new seven-year capacity purchase agreement with ExpressJet Airlines, Inc. to provide regional jet service at lower rates, resulting in approximately $50 million of annual savings
· Raising approximately $900 million through a variety of initiatives including an amended credit card marketing agreement, issuance of common stock, sale of Continental’s remaining equity interest in Copa Holdings, S.A. (Copa) and several secured borrowings
· Entering into framework agreements for a planned transition to the Star Alliance, linking worldwide networks and services of alliance members including United, Lufthansa, Air Canada, Singapore, ANA and Air China, to benefit customers and create revenue opportunities, cost savings and other efficiencies
· Implementing a new checked bag policy charging non-Elite customers on certain economy-class tickets a $25 service fee for a second checked bag, and numerous fuel surcharge and fare increases
Second Quarter Revenue and Capacity
“Despite solid operational and financial performance, we were unable to generate enough revenue to keep pace with the stratospheric increase in fuel prices,” said Jeff Smisek, president. “We will continue to take actions to increase our revenue and decrease our costs, while preserving our culture and core product integrity.”
Consolidated revenue passenger miles (RPMs) for the quarter increased 0.5 percent
year-over-year on a capacity increase of 2.7 percent, resulting in a second quarter consolidated load factor of 81.4 percent, 1.8 points below the second quarter record set in 2007.
Consolidated yield for the quarter increased 7.0 percent year-over-year. Consolidated revenue per available seat mile (RASM) for the quarter increased 4.6 percent year-over-year due to increased yields.
Mainline RPMs in the second quarter of 2008 decreased 0.2 percent compared to the second quarter 2007, on a capacity increase of 2.0 percent. Mainline load factor was 81.7 percent, down 1.8 points year-over-year. Mainline yield increased 6.0 percent over the same period in 2007. As a result, second quarter 2008 mainline RASM was up 3.8 percent over the second quarter of 2007.
During the quarter, Continental recorded a U.S. Department of Transportation (DOT) on-time arrival rate of 73.1 percent and a systemwide mainline segment completion factor of 99.5 percent.
For the fifth straight year, Continental was named the “Best Airline in North America” at the 2008 OAG Airline of the Year Awards.
In conjunction with the Transportation Security Administration (TSA), Continental expanded its paperless boarding pass pilot program, already in place at its Houston hub, to include its New York hub at Newark Liberty International Airport as well as Washington National Airport and Boston’s Logan International Airport. The program allows customers to receive boarding passes electronically on their cell phones or PDAs, which are scanned by TSA security officers at the checkpoint and can be used to board Continental’s flights, eliminating the need for paper boarding passes.
During the quarter, Continental launched the first-ever nonstop seasonal service between its hub at Cleveland Hopkins International Airport and Charles de Gaulle Airport in Paris, France.
The company’s average price per mainline gallon of fuel, including fuel taxes, increased 66.2 percent year-over-year.
